Retailing - United Kingdom

Euromonitor International : Industry Overview May 2011

Retailing

United Kingdom

List of Contents and Tables

Executive Summary ................................................................................................................................................ 1 Retailing in the UK Remains Steady ......................................................................................................................... 1 Discounts and Promotions Remain Important in Driving Footfall ........................................................................... 1 Non-grocery Retailing Struggles Due To Weak Economic Recovery ........................................................................ 1 Tesco Continues To Lead the Market ........................................................................................................................ 1 the Internet Will Encourage Growth Over the Forecast Period ............................................................................... 1 Key Trends and Developments .............................................................................................................................. 1 the Endless Recession ............................................................................................................................................... 1 the Price of Ethics ..................................................................................................................................................... 4 High-speed Line To Success...................................................................................................................................... 5 Private Label Increases ............................................................................................................................................ 8 Shopping Malls Benefit From the Economic Recovery ............................................................................................10 Major Sporting Events Give Retailers A Focal Point ..............................................................................................12 Market Indicators ..................................................................................................................................................13 Table 1 Employment in Retailing 2005-2010................................................................................13 Market Data ...........................................................................................................................................................13 Table 2 Sales in Retailing by Category: Value 2005-2010 ............................................................13 Table 3 Sales in Retailing by Category: % Value Growth 2005-2010 ..........................................14 Table 4 Sales in Retailing by Grocery vs Non-Grocery 2005-2010 ..............................................14 Table 5 Sales in Store-Based Retailing by Category: Value 2005-2010........................................14 Table 6 Sales in Store-Based Retailing by Category: % Value Growth 2005-2010 ......................14 Table 7 Sales in Non-Grocery Retailing by Category: Value 2005-2010 ......................................14 Table 8 Sales in Non-Grocery Retailing by Category: % Value Growth 2005-2010.....................15 Table 9 Sales in Non-store Retailing by Category: Value 2005-2010 ...........................................15 Table 10 Sales in Non-store Retailing by Category: % Value Growth 2005-2010 ..........................15 Table 11 Retailing Company Shares: % Value 2006-2010..............................................................15 Table 12 Retailing Brand Shares: % Value 2007-2010 ...................................................................16 Table 13 Store-Based Retailing Company Shares: % Value 2006-2010 .........................................17 Table 14 Store-Based Retailing Brand Shares: % Value 2007-2010 ...............................................17 Table 15 Non-Grocery Retailers Company Shares: % Value 2006-2010 ........................................18 Table 16 Non-Grocery Retailers Brand Shares: % Value 2007-2010..............................................18 Table 17 Non-store Retailing Company Shares: % Value 2006-2010 .............................................19 Table 18 Non-store Retailing Brand Shares: % Value 2007-2010 ..................................................19 Table 19 Forecast Sales in Retailing by Category: Value 2010-2015 .............................................20 Table 20 Forecast Sales in Retailing by Category: % Value Growth 2010-2015 ............................20 Table 21 Forecast Sales in Store-Based Retailing by Category: Value 2010-2015 .........................20 Table 22 Forecast Sales in Store-Based Retailing by Category: % Value Growth 20102015 ..................................................................................................................................20 Table 23 Forecast Sales in Non-Grocery Retailing by Category: Value 2010-2015 .......................20 Table 24 Forecast Sales in Non-Grocery Retailing by Category: % Value Growth 2010-2015.........................................................................................................................21 Table 25 Forecast Sales in Non-store Retailing by Category: Value 2010-2015 .............................21 Table 26 Forecast Sales in Non-store Retailing by Category: % Value Growth 20102015 ..................................................................................................................................21 Appendix .................................................................................................................................................................22 Operating Environment............................................................................................................................................22 Cash and Carry ........................................................................................................................................................23

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Table 27 Table 28

Cash and Carry: Sales by National Brand Owner: Sales Value 2007-2010 ......................23 Cash and Carry: Number of Outlets by National Brand Owner: 2009-2010 ....................24

Definitions ...............................................................................................................................................................24 Summary 1 Research Sources ..............................................................................................................25

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RETAILING IN THE UNITED KINGDOM

EXECUTIVE SUMMARY
Retailing in the UK Remains Steady
In 2010 retailing in the UK increased by 2% in current value terms, experiencing the same growth as the 2% CAGR over the review period. The market was underpinned by supermarkets and hypermarkets, which experienced steady growth regardless of the economic conditions.

Discounts and Promotions Remain Important in Driving Footfall

2010 ended with a Christmas shopping period that was stronger than many retailers expected, given the difficult economic headwinds that consumers were facing. However, as highlighted by the British Retail Consortiums report on the sales performance during that period, retailers were employing a number of promotions and discounts to encourage consumers to shop in their stores. The buying season up to Christmas followed a twelve month period of retailers using discounts and promotions, such as buy one get two free, in an attempt to get consumers to spend.

Non-grocery Retailing Struggles Due To Weak Economic Recovery

Grocery retailers increased by 3% in current value terms in 2010, compared with a negligible decline in nongrocery retailers. The weak economic recovery made the retail environment difficult for a number of channels which rely on non-essential purchases, such as clothing and footwear specialist retailers, which experienced a current value decline of 1% in 2010.

Tesco Continues To Lead the Market

Tesco continued to lead retailing in the UK in 2010, with almost double the share of its closest competitor, Asda Stores. Both Tesco and Asda Stores further strengthened their positions, gaining share marginally, Tesco up 0.4 of a percentage point and Asda Stores up 0.3 of a percentage point. With both companies improving their positions, Asda was unable to make any progress in closing the gap from its closest rival.

the Internet Will Encourage Growth Over the Forecast Period

Retailing in the UK is expected to increase by a constant value CAGR of 2% over the forecast period, as internet retailing will continue to experience strong growth and outperform store-based channels. The majority of the leading UK-based retailers are already seeing their internet operations outperforming their bricks-and-mortar stores, and this is set to continue.

KEY TRENDS AND DEVELOPMENTS

the Endless Recession
The UK has been emerging from one of its worst recessions since the 1930s, which saw the economy contracting by almost 7%. Economic output is not expected to return to pre-crisis levels until 2012. Whilst the UK is generally accepted to be on the right track in terms of recovery, with the risk of deflation thought to have passed, warnings still resound concerning the bumpy ride ahead, as the economy slowly trundles towards stability. Threats to the UKs recovery now include a set of external issues, such as rising commodity prices, a new crisis in sovereign debt markets or a sudden contraction in the US economy. Problems also remain in the UKs banking sector, as it has seen weak growth, with the risk of continuing high credit costs, and as it works to refinance in the region of 500.0 billion of funding. Following the credit crisis, consumers are all too aware of the risks associated with banks, which stands to impact on its financing costs and on the cost of lending to the real economy. In addition, the UK continues to

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have one of the highest budget deficits in the G20, as public debt has escalated to almost 1.0 trillion, which necessitated the implementation of tough austerity measures, intended to save 111.0 billion per year. As part of its emergency budget, the government announced a rise in VAT to 20%, major cuts to benefits and welfare payments, and an increase to 28% in capital gains tax for those earning over 49,700 annually with the average worker expected to be 400 worse off per year. Other moves included a freeze on child benefit for the next three years, and a two year freeze on public sector wages. The Conservative/Liberal Democrat government highlighted not only the gravity of the financial crisis which swept through the country in order to justify the measures, but pointed at reckless spending by the previous Labour government. This comes as part of an ambitious plan to remove the structural deficit between tax revenue and spending by 2015, which would otherwise remain in place even in the face of strong economic growth. The plan has inevitably been met by some criticism from economic analysts, who fear that such dramatic spending cuts will impede economic recovery and potentially reignite fears about the strength of the UK economy, pushing interest rates up and plunging the country back into recession. Concerns also abound concerning the high level of unemployment which persists in the country, expected to reach 8% in 2011spelling potential disaster both for the economy and the government, since job creation remains crucial to effective recovery. Current Impact Retail sales showed further growth in current value terms in 2010, but at a continuing slow rate. The unstable economic situation resulted in consumers continuing to take a fairly prudent approach to their spending. There was a noticeable shift in where consumers chose to shop, with it no longer being considered embarrassing to be seen to be bargain-hunting. The big four supermarket chains faced increasing competition from cheaper retail channels such as discounters and internet retailing, with supermarkets and hypermarkets seeing falling growth in current value terms. These outlets had to defend themselves from serious contenders for weekly shopping sales for the first time towards the end of the review period. As a result, the grocery industry saw aggressive price wars. Many supermarkets attempted to emulate Poundlands successful model by slashing prices to a round pound. Even in traditionally higher-end supermarkets, attempts were made to increase sales by offering cheaper private label product ranges, with 2009 seeing Waitrose launch its Essentials range, whilst Tesco and other supermarket retailers focused on expanding their budget ranges. In a further clear illustration of the hardships facing many consumers, clothing and footwear specialist retailers saw a decline of 1% in 2010, whilst furniture and furnishings stores saw its sales tumble by 5% in the same year, as consumers simply cut out unnecessary spending and postponed buying new homes and home refurbishments in the unstable economic climate. Budget retailers, on the other hand, enjoyed strong success towards the end of the review period. In variety stores, Poundland claimed to attract two million customers a week to its stores in the latter part of the review period, with consumers more determined than ever to seek out a bargain. In grocery retailers, consumers were, meanwhile, intrigued by the promise of low prices, and tempted by ever-expanding discounters, led by Aldi and Lidl. This resulted in a shift towards discounters. Middle-income consumers became increasingly comfortable shopping in hard discounters. Aldi claimed that over 50% of its customers were from ABC1 demographic groups in 2009. Discounters was consequently one of the fastest growing channels in grocery retailers in 2010, as Lidl stepped up its expansion plans in the UK, aiming for 1,400 stores in the longer term as part of an annual 8-12% expansion plan. Discounters were also keen to diversify and improve their ranges, particularly in non-grocery products, in line with the activities of the major supermarkets and hypermarkets. In a bid to compete with the array of services offered by players such as Tesco, Lidl also launched a new DVD rental service under the name Lidl Movies, making it the cheapest online DVD rental service in the country, and placing it in direct competition with Tescos DVD rental activities. As many retail channels either succumbed to low levels of growth, or even contracted in current value terms in 2010 due to the economic crisis, internet retailing meanwhile grew at a higher rate of 18% in current value terms. This channel benefited from bargain-hunting shoppers logging on in order to research products and prices before they purchased. Websites such as vouchercodes.co.uk and mysupermarket.co.uk thus proved increasingly popular. The channel was also helped by the investment made by many key players in their e-commerce offer, from Marks & Spencer adapting its website for easier viewing on mobile phone screens, through to massive investment from Tesco.

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Outlook As the UK emerged from recession in the final quarter of 2009, many analysts considered that the recovery had been faster than expected, given a buoyant construction sector and resilient consumers. The third quarter of 2010, however, saw slower than expected growth, with a rise of 1%, raising concerns about the impact of intended conservative austerity measures on economic output. Opinions were mixed however, about the gravity of the situation, with some commentators noting that domestic demand looked positive, as indeed were levels of investment. Household income was also reported to have increased, raising household saving levels, alongside increases in corporate profits. On the other hand, the contribution to the economy from exports turned negative, and fears remained about the full impact of austerity measures on levels of consumer spending, which is expected to be impacted as consumers are already being stretched by commodity price rises, frozen wages, higher taxes and cuts in spending. Whilst concerns remain, most analysts agree that the revised growth rate will not bring about a double-dip recession or cause the Bank of England back into Quantitative Easing particularly since inflation remains fairly high; in fact one percentage point higher than the Bank of England target of 2% for the whole of the year. Growth rates for 2011 have now been revised down from an initial estimate of 2%, reflecting this uncertainty. Other factors also included lower production, service and industrial output, the growth of which was revised down by 0.2% to 0.7%. Overall, revisions now suggest a contraction of 0.6% for the fourth quarter of 2010, highlighting concerns about the strength of the economy and consumers ability to absorb new austerity measures. Whilst a substantial part of this has been attributed to the unusually harsh winter seen in the UK in 2010, clearly, a consecutive quarter of decline would push the UK economy back into recession. The short term will be a major test of the flexibility of the UK economy. Over previous years, the economy surfed the wave of domestic demand, which remained surprisingly resilient over the years of recession. Growing evidence is emerging, however, that UK consumers were tightening their belts even prior to the implementation of austerity measures, with household spending reported to have fallen marginally in 2010, in the first decline seen in 18 months. Future Impact The recession is likely to have a lasting effect on retailing in the UK, with the average British high street looking considerably different to pre-recessionary times by the end of the forecast period. Many more retailers are expected to disappear at the start of the forecast period, as consumers remain reluctant to spend money in certain product areas. Furniture and furnishings stores is likely to be particularly vulnerable, as the downturn in housing sales shows little signs of abating. Pound stores are therefore likely to become more commonplace during the forecast period, with many replacing the outlets left by stores which have gone into administration, such as Woolworths. Grocery retailers is expected to become increasingly competitive during the forecast period. It is possible that government intervention may be needed to regulate the activities of UK supermarkets. The Competition Commission recommended that a code be put in place in order to ensure fair practice for all supermarkets. This would potentially impact on supermarkets ability to charge low prices, and thus restrict the channels ability to compete with discounters. Discounters is expected to enjoy continued growth during the forecast period, although it is expected that the consumer base of this channel will include fewer middle- and high-income consumers than during the review period, since as economic conditions improve slightly, consumers are likely to turn back to their old favourites, with Sainsburys reporting a notable increase in footfall. Whilst the channel will enjoy continued constant value sales growth amongst consumers with lower disposable incomes, and stands to benefit again in the event of another downturn, it was reported that Aldi racked up a 58 million loss in 2009 on sales of 2.0 billion, whilst Netto sold its stores to Asda and left the country. Discounters also continues to represent a fairly small proportion of the overall UK retail market, with Aldi and Lidl combined holding in the region of an eighth of the value sales of Tesco alone. As the worst impact and shock of the recession pass, consumers are likely to demand better choice and better quality once again, as it is reported that some smaller discounters stock approximately 800 lines, in comparison with 40,000 lines in an average supermarket.

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the Price of Ethics

The review period saw a steady increase in ethical shopping. Although this part of the market was somewhat hit by the recession and massive falls in spending, the general trend is for consumers to be more environmentallyand socially-aware. This shift towards conscientious retailing meant that people thought more about the social and environmental consequences of what they bought and where they bought it from, in an effort to minimise the negative effects on humans, animals and the environment. Changes included purchasing PET water bottles over regular water bottles, choosing products which do not use animal testing, selecting more Fairtrade products, buying organic or local produce, recycling, and efforts to avoid unethical manufacturers. As these types of sentiments increased amongst many mainstream consumers, major companies, from Tesco and Top Shop to McDonalds, increasingly offered greater ranges of Fairtrade products. The press and media have made a major effort to inform the public about the goods they buy, and consumers have responded by increasingly rejecting Third World sweatshops and unethical trading, and accepting their share in causing global warming. The BBC expos of Primark factories, and series such as Planet Earth and Blood, Sweat and T-shirts, further drew attention to ethics and the environment, bringing these issues into mainstream consumer-consciousness and putting pressure on retailers to focus more on their corporate and social responsibility. The trend of ethical consumption is also closely linked to health and wellness trends, as many consumers who are sensitive to their impact on the environment and society are also concerned with their health, which contributes to the growth of organic products. Even though organic and ethical may not always be in line with regard to transport miles, they tend to be associated in consumers minds with issues of origin, and this has become a concern for the ethical and health-conscious shopper. Whilst the recession forced many consumers to refocus on price and value-for-money, rather than ethical and environmental issues, there was clear evidence of continuing rising awareness of these concerns towards the end of the review period. Current Impact During the recession many consumers began to prioritise bargains over high moral standards when shopping, which could be seen in the success of discounters such as Lidl and Aldi, which experienced a notable increase in current value sales in 2010, whilst budget clothing retailer Primark also registered strong growth over the same period. In heartening contrast, however, the Fairtrade Foundation reported 43% growth in sales of Fairtrade products in the UK in 2009, indicating that there continues to be a growing number of people committed to paying a premium for Fairtrade products, regardless of the state of the economy. As a result of these trends, the image of retailers became increasingly important towards the end of the review period, vying with their offer and price to influence consumers purchasing decisions. Major grocery retailers notably entered the debate with a focus on both their product ranges and well-publicised initiatives. In addition, coffee chain Starbucks took the drastic step of making all of its coffee Fairtrade. Another company to address the ethical trend was LOral, which purchased The Body Shop in 2006; a reflection of its new commitment to ethics. Marks & Spencer also established its ethical brand image with a great deal of communication, and clearly labelled its products with sourcing information. The company has introduced a five year plan focusing on commitments such as becoming carbon neutral, sending no waste to landfill sites, sustainable sourcing, and helping to improve the lives of individuals in its supply chain and those of its customers. To promote its commitment to ethical causes, the company also embarked on a major marketing campaign to make consumers aware of its 100 point ethical plan and how the company plans to achieve all its targets. The retailer increased the number of its Fairtrade suppliers, and was one of the first supermarkets to start charging for plastic bags in early 2009. Such activity and increasing transparency has equipped consumers to make better and more informed decisions about their consumption habits. Although Fairtrade products are becoming increasingly available in stores, this movement is certainly stronger in some categories than others. Whilst Fairtrade tea, coffee and bananas are selling extremely well, the ethical consumption trend appears to have only penetrated to a certain extent in categories such as fashion clothing. Organic and Fairtrade clothing has certainly made a marked appearance in the UK, although sales remain small, as many consumers in this part of the market still appear more interested in fast fashion, rendering transport miles and treatment of workers less of an issue compared with price.

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Outlook Ethical consumption of all types, from organic, Fairtrade, animal welfare and environmentally-friendly to social responsibility, seems to be gradually moving into the mainstream, as consumer attitudes change. Before choosing a certain product, consumers are expected to take more time to examine whether a product is in line with their own ethical and even political values, rather than simply considering safety, nutritional value and cost. As the public becomes more informed about the state of the nations health, the environment and greater social wellbeing, ethical-driven consciousness will continue to grow. This provides an opportunity for retailers to capitalise on the fact that consumers are willing to pay extra for products which they perceive as healthier, better quality or more ethical. More knowledgeable and demanding consumers will also force retailers to work harder to establish their ethical credentials, with these manufacturers having an important role to play in guiding consumers and clarifying what falls under specific ethical claims, bringing better consistency to the ethical claims of different products. Ethical products are also expected to become more affordable during the forecast period, as leading chains such as Starbucks have led the way in converting their standard products into Fairtrade without increasing the unit price. In a similar vein, the review period saw Cadburys starting to produce its signature chocolate brand Dairy Milk using Fairtrade chocolate, whilst keeping the product at the same price, and rival chocolate manufacturer Mars announced that it would produce all of its chocolate products using sustainable chocolate by 2020. The fact that these changes to more ethical sourcing will less rarely be associated with price rises will encourage the trend to develop in the mainstream, as consumers fail to see why they should not simply select a more ethical product. These actions from leading players are likely to encourage other key players and smaller companies to follow suit. Over the shorter term forecast, the state of the economy is likely to remain a significant factor in consumer decisions to purchase more ethical products, since beyond isolated products, an average a basket of ethical foods is reported to cost up to 30% more than similar non-ethical items, whilst organic food, for the most part, remains more expensive in most categories. As the economic situation eases, however, more strong growth can be expected from ethical products, developing on an already strong consumer base. Many consumers suggest that they would buy Fairtrade products or food from sustainable farms if they could afford to pay the premium. Future Impact Consumers are expected to become increasingly sceptical of major companies during the forecast period, especially in the wake of the credit crunch, which has come to be viewed by many as a crisis triggered by the greed of large financial institutions. The corporate environment is changing, and all companies now need to build greater consumer trust. Retailers need to further develop their ethical and environmentally-friendly policies. However, it will be equally important for retailers to prove that they are genuinely concerned about the issues they are addressing. Many companies were accused of focusing on environmental and ethical issues as a PR exercise towards the end of the review period. Retailers will also need a holistic ethical and environmental strategy in order to build consumers trust. It will, for example, no longer be acceptable for a retailer to focus on using sustainable energy, whilst having a dubious supply chain linked to child labour or sweatshops. A stabilising economic situation will mean that retailers will need to position themselves not only on the basis of their promotions and prices, but also on their ethical credentials. Reduction of a companys carbon footprint is likely to become a key indicator for the ethical success of a retailer. Tesco was the first supermarket to assign a carbon label to its products in an attempt to attract more environmentally-conscious consumers. The retailer has stated that it will record its own carbon footprint, and hopes to reduce it by 10 million tonnes between 2008 and 2020. Over the review period, Tesco Ireland also opened its first eco store in Tramore. The 30,000 sq ft (2,800 sq m) retail outlet uses 45% less energy than a supermarket of a similar size. Setting a new benchmark for green technology and construction in retail in Ireland, Tesco Tramore will save 420 tonnes of CO2; this is a 30% annual saving. Marks & Spencer similarly announced ambitious plans to improve the companys performance in areas such as climate change, waste, health and raw materials. Despite its share price falling again in 2008, the company restated its commitment to its five-year Plan A, claiming it to be commercially sensible and morally required.

High-speed Line To Success

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Internet retailing was by far the strongest growth retail channel in the UK in 2010. Statistics suggest that computer usage is highest for students and people in employment, and is lowest for those aged 65 and over. Such a reality explicates the internets parallel with online shopping success. Increasingly high-speed lifestyles meant that more consumers turned to the convenience afforded by internet retailing, which allows them to shop at their convenience, avoid high street crowds by shopping, and to window shop from home. Internet shopping has become a popular pastime for some people, particularly as it has become easier and safer for consumers both to make purchases online and browse. As a consequence, both high street retailers and focused internet retailers sought to improve and modernise their online offerings in order to attract the increasing percentage of consumers shopping online. New figures from the European Commission indicate that broadband penetration in the UK is on the rise, with many consumers opting for broadband bundles, which integrate broadband, digital TV and home phone facilities. Between January 2009 and the start of 2010, broadband penetration was reported to have grown by 1% to reach almost 30%; higher than the European Union average of 25%. In addition, the sector has undergone marked consolidation in the UK, with the merger of TalkTalk and Tiscali in 2009, which resulted in three fixed broadband providers accounting for over a 20% market share. Increasingly, however, basic transactional internet retail websites are no longer enough to strongly compete in the competitive internet retailing environment. Consequently, many retailers are developing applications on alternative platforms in order to give consumers better access to internet retailing. Apple Inc commented on the success of the first 12 months of its iPhone apps store in 2009, and stated that three out of its top 25 applications were from retailers. This was despite the fact that retailing apps accounted for less than half a percentage point of the available applications. As accessibility grows to these services, so will UK consumers penchant for internet retailing, with notable potential for growth still remaining in the channel, through improving access for older consumers and other demographics presently under-utilising the technology. Nevertheless, the internet is now the fastest growing retailing channel overall, and requires special focus separate from other store-based and non-store channels, bringing increasing competition both in the internet retailing channel and to the overall market, as retailers increasingly move to offer new services and products, which perhaps their existing freestanding shop units do not allow. Current Impact Internet retailing in the UK saw a number of developments over the review period and in 2010. Internet retailing sites are no longer simply a place to purchase an item quickly and from the convenience of home. Instead, sites seek to replicate the more personal shopping experience offered in stores. As of November 2006, Tesco was the only food retailer to make online shopping profitable, operating the largest online grocery service in the country, covering products from grocery items through to software, telecommunications, financial services and, most recently, DVD rental. The company intends to continue investing heavily in the development of its online facilities over the forecast period, extending its online offering to a greater range of products. Toy specialist Toys R Us, meanwhile, paid 3.6 million in 2010 for the toys.com domain name. The significant amount paid by Toys R Us for the name was speculated by many analysts to express the companys commitment to developing its online business. The domain name will also give the company significant brand awareness, as it strives to counter the downturn in the market and seeks to develop more cost-effective ways of operating. The social nature of shopping inspired sites such as Asos.com to introduce online forums, whereby consumers can discuss style tips and ideas. HMV Music, meanwhile, launched getcloser.com, allowing users to discuss and recommend bands and movies. Retailers are also realising the importance of allowing customers to interact not only with each other, but also with the retailer. Consequently, sites such as yourasda.com were created in order to facilitate feedback on retailers performance and product range. Website development was not the only focus for retailers in 2009. Many realised the potential for sales via internet-enabled devices and smart mobile phones such as the iPhone and Blackberry. Ocado and Oasis from Aurora Fashions led the way, launching iPhone applications in 2009. These allow consumers to browse their product ranges, which are stored to their phone memory. Ocados application allows consumers to select a shopping list of products on-the-go, and then connect to a computer to confirm their order and make payment. Outlook The current economic climate is also expected to play a large part in encouraging internet sales, as consumers use the internet both to make purchases at cut prices, but also to make price comparisons through the many

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search engines and review sites available online. More price competition will also be seen, as consumers remain acutely price-sensitive, given the gravity of the financial crisis and the governments austerity measures, which mean that consumers will be faced with continued job uncertainty, wage reductions, reduced disposable incomes, increasing energy bills and higher taxes, contributing to a further loss in consumer confidence. Growth in the internet retailing channel will also be supported by rising broadband penetration and the increasing use of fibre optic services, which are set to see a marked increase in penetration over the forecast period. There are also plans to increase the level of broadband penetration in the UK to 100% by as early as 2012. It is thought that this could be achieved by speeding up infrastructure development and cutting down on government interference, allowing more companies to invest in broadband. A final decision on the future of broadband is expected to come in June 2011. The popularity of smart phones is also expected to increase further during the forecast period, as consumers increasingly hectic lifestyles require them to do more on-the-go, which suggests that the advantages of having a successful mobile application in place should not be underestimated by UK retailers. Some retailers may dismiss this trend as a passing fad, and many retailers appeared to be happy to develop a low-cost mobile phone-enabled internet retailing site. However, the benefits of offering a mobile phone application include offering consumers a clearer and faster experience than an e-commerce site. Applications also enable users to use various online store features on a smart phone, offering, amongst other things, the possibility of integrating delivery dates with a smart phone calendar for convenience. The range of devices for which applications are being designed is also increasing. It was Apples iPhone which initialised the development of applications; however, Research in Motion, makers of Blackberry, and the producers of the next smart phone to launch in the UK, Palm Pre, also created application shops towards the end of the review period, with more of this kind of activity set to come. Future Impact Internet retailing is set to continue to grow quickly over the forecast period. Technological and design advances are likely to be crucial in maximising sales growth through this channel during the forecast period. These will also enable retailers to stand out from the competition, in an environment where consumers show huge brand loyalty; a consumer may visit 10 or 12 shops on the high street when shopping, while the average internet shopper is likely to look at just two or three online sites. Mobile phone applications are expected to become increasingly prolific over the early years of the forecast period, with a number of retailers planning to enter this area. Tesco announced towards the end of the review period that it would make back-catalogues of data available, including sales and shopper preferences, in the hope of attracting third-party developers for mobile applications. Wm Morrison made an announcement in 2010 that it intends to trial online shopping. The company is now searching for an advertising firm to help it publicise the new style of outlet over the course of 2011. This came as the company realised that it was falling behind its rivals in terms of offering customers online shopping for groceries and other products, as it focused on developing its high street presence over recent years. The online venture is expected to make its debut in the first half of 2011. Pre-empting this launch, Wm Morrison also announced the acquisition of internet retailer Kiddicare, intended to provide a gentler entry for the company into the world of online retailing. Other companies have similarly recognised the benefits of developing their online facilities, with Marks & Spencer releasing a statement indicating that the company intends to increase its internet sales by 400 million to 800 million - 1.0 billion by 2014. In order to ensure this, February 2011 saw the announcement that Tesco.coms CEO Laura Wade-Grey would be joining Marks & Spencer as executive director of multi-channel and e-commerce. The company has been very much focused on enhancing its internet operations, with recent updates including a new mobile-friendly website. The company opted for an option which involves the creation of middleware to access a URL and scrapes and reuses content from its traditional e-commerce website. Usablenet developed the middleware for Marks & Spencer, which also included a custom-created mobile design of the site. Other features include product search and store finder facilities, as well as a customer feedback feature and a choice of delivery methods. The company also launched a new customer service tool called Smart FAQ on its traditional site, created using software from Transversal. The feature allows customers to ask questions via the search field. Although smart phone applications are likely to prove successful in some areas, in others the format may be less suitable, with consumers demanding closer viewing of products in the case of categories such as clothing and

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footwear. Towards the end of the review period it was not possible to carry out payment transactions via applications on a mobile phone, thus requiring the user to connect to a PC in order to make purchases, limiting the scope of internet retailing. Without payments being enabled via smart phone applications, sales via this method are not expected to reach their full potential. However, there is marked potential for growth in terms of groceries, with applications potentially emerging which allow consumers to create their weekly shopping list at a convenient time. Service providers such as theatres and cinemas could also benefit from offering such applications, which would allow consumers to book last minute tickets on-the-go.

Private Label Increases

Private label was one of the few parts of the market to register a marked and steady positive movement, as the UK struggled to recover from its most severe recession in decades. Although this part of the market already saw marked gains over much of the review period, private label received a windfall as the credit crunch hit. As instability grew and levels of disposable income fell, consumers were all the easier to lure towards private label offerings with the promise of low prices for high-quality products. The recession proved a busy time for manufacturers in the field, particularly those sitting at the head of the market. Many focused on developing their private label ranges both in terms of range expansion and improvements in quality. As these products proved increasingly desirable to consumers, value sales growth came at the expense of branded products at times. This is bringing about increased competition, which is proving to be a growing headache not only for the larger names in the market, but also for the smaller players, as they lose more shelf-space to extended private label lines. Unless a brand currently holds an unquestionable lead in a category, it is in danger of being removed from shelves, particularly in the case of smaller grocery retailers and convenience stores. As people have cut down on dining and drinking outside of the home, this has inevitably led to some positive growth amongst brands, although this appears to now be extending to private label. Making the competition hotter are not only the launch of various budget private label lines in direct response to the recession, and various relaunches, but the efforts of UK retailers to develop a premium positioning in private label. Despite some concerns about the risk of a double-dip recession and tough austerity measures, many analysts note that there is a clear premiumisation trend emerging in private label. The relaunches seen are a clear demonstration to consumers of the competitiveness of these products in relation to branded offers. The distinct launches of economy and premium private label lines serve to encourage the perception that private label is very much at home competing with luxury branded products, and is not merely a budget option. Private label products increasingly frequently compete with branded products at every point in the market, and it seems that retailers are keen to move consumers up the price scale in order to benefit from their willingness to pay a little more for better quality products. Current Impact Although successful participation in the market does seem to crucially depend on the adaptability of manufacturers and their sensitivity to market conditions, it is also clear that whilst private label has proved to be a marked success in some parts of the market, it has been notably less successful in others. Consumers have seemed most open to accepting private label when it comes to more generic products. Items such as home care products, canned food and other food offerings have gradually been winning more favour, whilst sales of cosmetics have been slow to grow in this area. Driving the private label crusade in these and other areas are some of the UKs largest retailers, each of which has a highly developed range of private label products. Whilst focus fell on the premium end of the market over the review period, with retailers seeking to drive value growth and improve the image of private label, the recession saw attention shifting to the economy end of the spectrum, and now it appears to be shifting back again. In all cases, these products have gained increasing shelfspace and had new products added to their ranges, improving the perception of private label amongst consumers and contributing to driving sales in this part of the market. Private label previously stood for cheap and poor-quality products, but now major supermarkets and hypermarkets are accommodating ranges which span across economy, mid-priced and premium products, offering consumers new choice and gradually changing attitudes. Private label products increased their share of grocery retailing every year in the review period, with this growth encouraged by retailers relaunching their private label lines in 2010.

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A leading health retailer in the UK, Holland & Barrett, also launched a new private label organic range in 2009 called Dr Organic, consisting of 68 personal care products, including toothpaste and shampoo, in an interesting move into a less developed area in terms of private label. Sales were reported to be good, based on its significantly lower prices compared with many other organic cosmetic and healthcare products. Whilst the overall news for private label has been good, growth has not been entirely consistent across retailers, although in some cases there is evidence of consumers trading up to premium private label products. Whilst Tesco Finest was reported to have seen 4% growth over 2010, and Morrisons registered impressive 15% growth in its The Best line, Sainsburys Taste the Difference and Asdas Extra Special brands both declined, by 4% and 2% respectively. As part of its relaunch, however, Sainsburys added a Bistro sub-brand to its premium line, which it claims offers restaurant quality food, perhaps in a bid to counter the decline. Compared with the other major retailers, however, its economy Basics line is the only one to have continued to grow. Asda, meanwhile, launched a mid-priced line called Chosen by You, which is intended to reflect its commitment both to offering better value-for-money and higher quality. Recent movements have been clearly focused on a greater balance of considerations, with consumers showing that they are not merely interested in price, but also the quality and provenance of products. Outlook Although much of the early growth of private label was based on a desire to make savings where possible, the indications seem clear that private label is changing. Current figures place the penetration of private label in the UK at around 46%, reflecting that there is still notable scope for growth, and ensuring the presence of private label in the market. As the economy continues to stabilise, as is hoped, the short-term promises to be challenging for retailers and manufacturers alike, particularly those engaged in the production and promotion of brands. Manufacturers will be keen to offer consumers the best value-for-money, although this will come not only with a trade-off of profits, but of power in the market, placing retailers and consumers in a position where they come to expect low prices and promotional activity as a matter of course, negatively impacting producers, and potentially the availability of products. Consumer concerns about this remain minimal, with it seeming far more likely that they will continue to relinquish brand loyalty in favour of better value-for-money. Although many commentators have referred to this as savviness on the part of consumers, as they apparently hunt around for the best deals and offers in the market in order to save money, statistics show that the number of private label products in the market has grown significantly, indeed, notably ahead of branded offerings, making increased sales in private label a fairly predictable outcome. Whilst this may be argued to have come about given increased consumer demand for lower-priced products with improved quality, supermarkets and hypermarkets, and, increasingly, convenience stores and discounters, have gone to significant efforts to promote their premium private label ranges in the quest for better margins. Private label is therefore now competing in the market on a new level, exerting significant control over consumers purchasing decisions, as brands did over earlier parts of the review period. Over the forecast period, growth in private label will continue to be more focused on some parts of the market than others. Although categories such as canned and chilled processed food, home care and hot drinks have seen notable activity coming from the increased presence of private label, other categories, such as cosmetics and toiletries, have seen a far slower encroachment of private label products, as consumers simply seem less inclined to switch from trusted products in some areas. Indeed, items which require higher levels of consumer trust, such as OTC healthcare products or hair care products, seem less susceptible to private label brands, as these more complex branded products are often supported by strong and consistent advertising campaigns, incorporating extensive scientific claims, which maintain brand equity. It will thus be interesting to observe how Holland & Barretts Dr Organic line performs over the coming years. Future Impact The forecast period is expected to see supermarkets, hypermarkets, convenience stores and other retail outlets all focusing on enhancing their private label ranges in the light of clear market trends illustrating strong consumer demand for good value-for-money alongside better quality. It is worthwhile considering, however, that although this tendency is coming in light of the severe recession, which severely dented consumer confidence, reports suggest that consumers in 2010 spent far less on food than they did in previous decades. In 1930, for example, it

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is recorded that on average people spent 50% of their total income on food, with this falling to just over 10% in 2010, taking into account wage increases, which reveals the stark fall in prices which has actually taken place. These tumbling prices have brought new expectations about the appropriate cost and worth of food, which has only been enhanced by the recession. All players in the food market, from farmers through to manufacturers and retailers, are under significant consumer pressure to reduce prices ever further, leading to intense competition and engendering the opinion that food is easy to come by and costs little to produce. The emergence and growth of discounters has done nothing to alleviate the concerns of some critics, who are calling for a reappraisal of attitudes and prices, as many products continue to be sold for less than their production cost; in some cases hardly making it worthwhile for primary producers to even bother bringing certain staple products onto the market. This problem will also be exacerbated by rising fuel prices, carbon tax and other costs over the forecast period, with these increased costs rarely reflected in retail end prices. Since it will be the largest and strongest of retailers which will be able to compete in this kind of market, given their ability to absorb some of these costs as they strive to support volume growth, this will lead to the dominant retailers in the market gaining ever increasing power, which stands to eventually limit consumer choice. Even large retailers, however, appear to be concerned about their margins, as they increasingly focus on their premium ranges and encourage more consumers to trade-up. As increasing pressure comes from various bodies to introduce guidelines concerning minimum prices, the future of discounters, and indeed overall promotional activity, looks less certain. Although low prices have clearly made lives easier for consumers, the concern is that this stands to become unsustainable, if it becomes unprofitable for producers to produce their goods, causing problems in food supply. For the time being, however, more competitive prices, higher-quality products, new launches and increased shelf-space will be the order of the day. Retailers will promote their private label products, increasing the pressure on brands, in order to establish them firmly in the market on an even footing with their branded counterparts.

Shopping Malls Benefit From the Economic Recovery

Shopping malls are performing well as the UK economy recovers from the recession, even if the recovery is weak. Euromonitor International estimates the GDP growth in 2010 was 2%, compared with a 5% decline in 2009 after the countrys longest post-war recession, which showed its first signs in late 2007. The global recession halted the plans of many new shopping mall developments across Europe, but now the UK economy has started to recover, plans for future development are in full swing, and recent launches, such as Westfield, are performing well. Current Impact Shopping malls have been continuously changing the shape of the UK retail landscape, as they are leading to the growth of major shopping districts outside of city centres. Therefore they give retailers further avenues for growth, especially if they have already saturated the main shopping areas in city centres. Consumers are willing to travel to a large shopping mall even if it necessitates a longer journey, because developers have strived to offer a pleasant shopping experience through shopping malls. Larger malls often contain cinemas and a run number of special events, especially during holidays such as Easter and Christmas, as well as a broadening range of consumer foodservice. The strong performance of shopping malls certainly helped to boost the value of the retail market, which increased by 2% in 2010. Sales at Westfield shopping mall were up by 30% in 2010, after it struggled in the first year of its launch in 2008/2009. The continuing development of the new Westfield Centre in Stratford, London, demonstrates that the UK is perceived as offering further opportunities for shopping mall developments. The Stratford mall is planned to be built in time for the Olympics, so it will have a guaranteed high footfall during the event. However, there have been other recent developments in alternative locations, such as One New Change, completed in October 2010, situated by Londons St Pauls Cathedral and station. Whilst the annual results of this development are yet to be seen, the fact that a number of leading retailers, such as H&M, invested in stores there shows that it is considered a lucrative retail venture.

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Other international brands have chosen shopping malls as the destination of choice to launch in the UK. For example, American young fashion chain Forever 21 opened its first UK store in Birminghams Bull Ring shopping mall in 2010. In addition, the prestigious Canadian high-end lingerie brand Victorias Secret plans to open its first UK store in Londons Westfield in 2011. Other foreign or smaller UK-based retail chains may now consider expanding into shopping malls rather than city centre destinations, since some of the worlds most established brands are prioritising the former. Outlook Shopping malls are likely to continue to do well over the forecast period, as they offer a unique shopping experience which city centres tend not to provide. They are also in a better position to compete with the rise of the internet, because customers often travel to less convenient locations for a specific shopping trip at shopping malls, whereas a larger proportion of city centre shoppers are simply passing through on other errands. The fact that shopping malls are already inconvenient when compared with city centres, but still manage to attract crowds, means that the convenience factor of internet retailing will not deter consumers from frequenting shopping malls. However, new shopping mall developments in the UK are expected to be fewer, as the UK is already one of the most saturated retail markets in the world. In addition, economic recovery has been weak, and there have even been fears of a double-dip recession in early 2011. Urbanisation in the UK has also been a key factor leading to overcrowding in city centres, and the UKs urban population is expected to grow by 7% between 2010 and 2011. Therefore, increased overcrowding in the cities may lead consumers to seek respite in out-of-town shopping malls such as Lakeside, which are more spacious, so the crowds are less concentrated. Future Impact UK-based retailers may decide to pursue expansion plans in shopping malls rather than city centres over the forecast period, as they will be encouraged by the success of Westfield, Shepherds Bush, which has almost 100% occupancy and consistently pulls in crowds. However, it is unlikely that any major developments will be planned, as the current economic recovery is fragile. If fears of a double-dip recession are allayed, then developers may seek to invest in new shopping malls, as they often offer consumers a more entertaining shopping experience than high streets, especially during special occasions, when retailers and developers host marketing events such as fashion shows or concerts. Clothing and footwear specialist retailers will be one of the most affected channels by the development of shopping malls, as they tend to dominate these centres. They will benefit from new growth opportunities from the London developments, such as Westfield Stratford, but new stores in shopping malls will also cannibalise sales from their city centre stores. International stores entering the UK market via shopping malls also increase the likelihood of shopping malls taking share from city centre shopping districts, as consumers will be drawn to new and existing stores, especially prestigious ones such as Victorias Secret. Shopping malls usually have a good balance of luxury and mid-priced stores, but often have a stronger focus on luxury than a typical city centre high street. Therefore, stores in luxury shopping districts such as Bond Street may suffer from sales cannibalisation if they also have stores in Westfields designer village, for instance, or if they do not have stores in shopping malls they may struggle to compete with brands which do. The major hurdle for the potential development of shopping malls is the state of the UK economy. If the UK does fall back into recession, retailers will struggle to gain back the investment they have made in new stores, and shopping malls are far from cheap retail locations, as developers often charge a premium. By 2015, if the economy is strong, it can be expected that more shopping mall developments will be seen across the UK, as they provide entertainment and a family day out, which ultimately means that they are better positioned to compete with internet retailing than city centre locations. In order to capitalise on the potential of

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shopping malls, developers and retailers must continue to use event-based marketing in order to attract consumers and differentiate shopping malls from high streets.

Major Sporting Events Give Retailers A Focal Point

The World Cup in 2010 had a mixed impact on UK retailers. Many expected that it would give a significant boost to sales, but this was only the case for grocers and a few other lucky retailers. Many companies had to deal with dwindling footfall, as they lost consumers to pubs and homes across the country screening the games. As the country now prepares for the Olympics, retailers are optimistically planning on strategies to capitalise on the expected boost to sales. However, UK retailers can expect to reap rewards largely due to the influx of tourists, and the fact that the Olympics arguably generates excitement for a wider group than the World Cup. Current Impact The World Cup was expected to give a significant boost to the UK retail market, but the result was disappointing for a number of companies. However, grocers which benefited made a concerted effort to ensure that they fully capitalised on the opportunity. Electrical retailers benefited the most, as consumers scrambled to by new high-quality high definition televisions. Retailers aggressively marketed in a bid to win consumer business and make the most of such an opportunity during difficult market conditions. An example of gimmicks used to further encourage sales of televisions was DSG Internationals offer to consumers purchasing televisions over 599, offering 10 back for every goal scored by England. A number of retailers went even further, offering a full refund of products if England won the World Cup. Toshiba applied this offer to laptops and televisions purchased between 12 April and 10 June 2010. However, it is unknown whether the offer was able to attract a significant number of optimistic consumers into buying Toshiba products in particular. In 2010 the retail market grew by 2%, which was only slightly higher than the current value growth rate in 2009. Therefore, the World Cup did not have a huge impact on the overall market, but instead provided a significant boost to specific retailers. However, even those retailers which benefited had to deal with clearing a mountain of World Cup branded merchandise, and this problem was exacerbated by Englands early exit from the competition. Companies had to introduce a flurry of promotions. For instance, Marks & Spencer discounted selected World Cup merchandise by up to 70%. Despite the difficulties experienced during the World Cup, with heavy overstocks and widespread post-World Cup discounting, many leading retail chains already have plans in place to launch merchandise for the Olympics in 2012. For example, Jeweller Links of London will be selling jewellery inspired by the 2012 Olympics, as it is the official jeweller of the competition from 2011. It remains to be seen whether there will be strong demand for such products, especially jewellery, which will probably have a high price tag. Outlook The London 2012 Olympics is expected to give more of a boost to more channels in the UK retail market than the World Cup, as it will attract thousands of tourists, and has spurred the development of Westfield Stratford shopping mall. However, companies outside of East or Central London may have to deal with reduced footfall, as people in the capital seek to stay near the action. Whilst those large chains which plan to invest in locations in Londons newest shopping mall risk cannibalising sales from their stores within and surrounding London, the increase in footfall across the city due to tourism is expected to negate this. The impact of the Olympics on the retail market is expected to last once the competition has finished, as it is likely to generate an interest in sport, and thus encourage sales of sportswear and equipment. It will also lead to the urban regeneration of deprived East London, and this is likely to encourage foreign retailers to launch stores in the area. North American-based retailers such as Victorias Secret already plan to launch their first UK stores in Westfield Shepherds Bush, so the same trend can be expected in the Stratford mall.

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Future Impact As the 2012 Olympics draws nearer, it is likely that the first Olympics-based marketing campaigns will begin to take shape, and by mid-2011 will be in full swing. All retailers, ranging from supermarkets to clothing and footwear specialist retailers, are expected to have Olympics-based campaigns, as it is such an important event which is expected to boost the whole of the UK economy. Retailers such as Next have already generated publicity by announcing plans to supply the UK Olympics team with clothing. Next and John Lewis are both amongst the official suppliers of the Games, and apparel retailer and brand Adidas is one of the official partners of the Games. A wave of patriotism in the run-up to the Olympics could be advantageous for brands which appear to be supporting the UK in the competition. Since the Olympics has a strong focus on regenerating a deprived area of London, retailers may also focus on supporting charities, especially those with a focus on sport across the country. For instance, Tesco launched a television advertising campaign featuring Paula Radcliffe to try and recruit members for Cancer Researchs Race For Life event in early 2011. The success of Olympics-based publicity and marketing campaigns in the run-up to the games will largely depend on the state of the economy. If the UK slips back into recession in 2011, which has been suggested by some economists, Olympic fever alone is unlikely to provide a significant boost to the UK retail market. On the other hand, if the economy continues to recover, the excitement generated by the Olympics may translate into increased sales for savvy retailers which capitalise on the opportunities offered by the Games, either by advertising, sponsorship or promotions on relevant products. However, the impact of the Olympics is likely to fade towards the end of the forecast period, as the global focus will move to the next destination, Brazil, in 2016. It will be virtually impossible for retailers to keep the momentum by 2014, and merchandise from the competition is expected to be completely cleared by 2013.

MARKET INDICATORS
Table 1 Employment in Retailing 2005-2010 2005 Total employment ('000 people) Employment in retailing ('000 people) Employment in retailing (%) (% of total employment)
Source:

2006 28,926.3 3,316.0 11.5

2007 29,099.9 3,340.0 11.5

2008 29,202.8 3,342.0 11.4

2009 28,829.3 3,335.0 11.6

2010 28,975.8 3,328.0 11.5

28,619.4 3,329.0 11.6

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews

MARKET DATA
Table 2 million 2005 Store-based Retailing Non-Store Retailing Retailing
Source:

Sales in Retailing by Category: Value 2005-2010

2006 257,585.4 19,459.5 277,044.9

2007 263,198.9 22,289.5 285,488.4

2008 266,594.6 24,669.2 291,263.8

2009 268,931.5 27,193.9 296,125.4

2010 272,469.3 30,368.8 302,838.1

250,510.2 17,376.8 267,887.0

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

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Table 3

Sales in Retailing by Category: % Value Growth 2005-2010

% current value growth 2009/10 Store-based Retailing Non-Store Retailing Retailing

Source:

2005-10 CAGR 1.7 11.8 2.5

2005/10 TOTAL 8.8 74.8 13.0

1.3 11.7 2.3

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 4

Sales in Retailing by Grocery vs Non-Grocery 2005-2010

% retail value rsp excl sales tax 2005 Grocery Non-Grocery Total
Source:

2006 44.9 55.1 100.0

2007 44.2 55.8 100.0

2008 44.0 56.0 100.0

2009 43.6 56.4 100.0

2010 42.6 57.4 100.0

44.9 55.1 100.0

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 5 million

Sales in Store-Based Retailing by Category: Value 2005-2010

2005 Grocery Retailers Non-Grocery Retailers Store-based Retailing

Source:

2006 123,657.4 133,928.0 257,585.4

2007 127,199.8 135,999.1 263,198.9

2008 132,751.5 133,843.0 266,594.6

2009 137,043.6 131,888.0 268,931.5

2010 140,785.0 131,684.3 272,469.3

119,203.9 131,306.3 250,510.2

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 6

Sales in Store-Based Retailing by Category: % Value Growth 2005-2010

% current value growth 2009/10 Grocery Retailers Non-Grocery Retailers Store-based Retailing
Source:

2005-10 CAGR 3.4 0.1 1.7

2005/10 TOTAL 18.1 0.3 8.8

2.7 -0.2 1.3

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 7 million

Sales in Non-Grocery Retailing by Category: Value 2005-2010

2005 Clothing and Footwear Specialist Retailers Electronics and Appliance Specialist Retailers Health and Beauty Specialist Retailers 31,261.0 11,246.3

2006 31,651.8 11,629.9

2007 32,063.2 12,109.0

2008 30,771.1 12,442.0

2009 29,771.0 12,552.7

2010 29,348.3 12,854.0

11,958.6

12,165.8

12,554.3

12,962.8

13,200.0

13,348.9

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Home and Garden Specialist Retailers Leisure and Personal Goods Specialist Retailers Mixed Retailers Other Non-Grocery Retailers Non-Grocery Retailers
Source:

23,411.6 25,208.5

23,768.5 25,454.6

23,905.3 25,381.9

23,014.8 25,149.1

21,984.4 24,912.5

21,082.9 24,917.2

23,055.3 5,165.0 131,306.3

24,047.5 5,210.0 133,928.0

24,834.6 5,150.8 135,999.1

24,271.6 5,231.7 133,843.0

24,130.5 5,336.8 131,888.0

24,695.4 5,437.7 131,684.3

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 8

Sales in Non-Grocery Retailing by Category: % Value Growth 2005-2010

% current value growth 2009/10 Clothing and Footwear Specialist Retailers Electronics and Appliance Specialist Retailers Health and Beauty Specialist Retailers Home and Garden Specialist Retailers Leisure and Personal Goods Specialist Retailers Mixed Retailers Other Non-Grocery Retailers Non-Grocery Retailers
Source:

2005-10 CAGR -1.3 2.7 2.2 -2.1 -0.2 1.4 1.0 0.1

2005/10 TOTAL -6.1 14.3 11.6 -9.9 -1.2 7.1 5.3 0.3

-1.4 2.4 1.1 -4.1 0.0 2.3 1.9 -0.2

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 9 million

Sales in Non-store Retailing by Category: Value 2005-2010

2005 Direct Selling Homeshopping Internet Retailing Vending Non-Store Retailing

Source:

2006 1,094.3 6,104.9 11,430.6 829.7 19,459.5

2007 1,079.7 6,173.1 14,397.4 639.3 22,289.5

2008 1,072.9 6,065.0 16,972.7 558.6 24,669.2

2009 1,097.7 5,806.6 19,815.7 474.0 27,193.9

2010 1,137.3 5,319.8 23,441.9 469.7 30,368.8

1,119.9 6,225.1 9,195.6 836.2 17,376.8

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 10

Sales in Non-store Retailing by Category: % Value Growth 2005-2010

% current value growth 2009/10 Direct Selling Homeshopping Internet Retailing Vending Non-Store Retailing
Source:

2005-10 CAGR 0.3 -3.1 20.6 -10.9 11.8

2005/10 TOTAL 1.6 -14.5 154.9 -43.8 74.8

3.6 -8.4 18.3 -0.9 11.7

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 11

Retailing Company Shares: % Value 2006-2010

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% retail value rsp excl sales tax Company Tesco Plc Asda Stores Ltd J Sainsbury Plc Wm Morrison Supermarkets Plc Marks & Spencer Plc Boots UK Ltd Argos Plc Co-operative Group Ltd, The Waitrose Ltd DSG International Plc B & Q Plc Next Plc Spar Ltd (UK) Arcadia Group Ltd John Lewis Partnership Plc Debenhams Retail Plc Iceland Frozen Foods Ltd Lidl Ltd Primark Stores Ltd Musgrave Group Plc Others Total
Source:

2006 11.1 5.3 5.5 3.9 2.9 2.1 1.7 1.1 1.1 1.5 1.4 1.1 0.9 0.7 0.7 0.8 0.4 0.5 0.4 0.7 56.3 100.0

2007 11.3 5.6 5.5 3.9 2.7 2.1 1.9 1.3 1.2 1.5 1.4 1.1 0.9 0.6 0.9 0.8 0.6 0.5 0.5 0.7 55.1 100.0

2008 11.9 5.9 5.4 4.2 2.7 2.2 1.8 1.5 1.3 1.5 1.3 1.0 0.9 0.6 0.9 0.8 0.6 0.6 0.5 0.6 53.8 100.0

2009 12.1 6.2 5.5 4.4 2.8 2.2 1.9 1.6 1.4 1.4 1.3 1.1 1.0 0.9 0.8 0.8 0.7 0.6 0.6 0.7 52.0 100.0

2010 12.5 6.5 5.7 4.7 2.9 2.3 1.9 1.8 1.4 1.3 1.3 1.1 1.0 0.9 0.8 0.8 0.8 0.7 0.7 0.7 50.2 100.0

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 12

Retailing Brand Shares: % Value 2007-2010

% retail value rsp excl sales tax Brand Company Asda Sainsbury's Tesco Extra Morrisons Tesco Superstore Marks & Spencer Boots Argos Waitrose B&Q Tesco Express The Co-operative Spar John Lewis Currys Iceland Next Tesco online Debenhams Lidl Others Total
Source:

2007 5.6 5.5 4.1 3.9 4.9 2.2 1.8 1.9 1.2 1.4 0.8 0.9 0.9 0.9 0.6 0.8 0.5 0.8 0.5 60.8 100.0

2008 5.9 5.4 4.5 4.2 4.9 2.2 2.0 1.8 1.3 1.3 0.9 0.9 0.9 0.9 0.6 0.7 0.6 0.7 0.6 59.7 100.0

2009 6.2 5.5 4.7 4.4 4.6 2.2 2.2 1.9 1.4 1.3 1.0 0.5 1.0 0.8 0.8 0.7 0.8 0.7 0.7 0.6 57.8 100.0

2010 6.3 5.7 4.8 4.7 4.6 2.3 2.2 1.9 1.4 1.3 1.2 1.1 1.0 0.8 0.8 0.8 0.8 0.8 0.8 0.7 56.1 100.0

Asda Stores Ltd J Sainsbury Plc Tesco Plc Wm Morrison Supermarkets Plc Tesco Plc Marks & Spencer Plc Boots UK Ltd Argos Plc Waitrose Ltd B & Q Plc Tesco Plc Co-operative Group Ltd, The Spar Ltd (UK) John Lewis Partnership Plc DSG International Plc Iceland Frozen Foods Ltd Next Plc Tesco Plc Debenhams Retail Plc Lidl Ltd

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

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Table 13

Store-Based Retailing Company Shares: % Value 2006-2010

% retail value rsp excl sales tax Company Tesco Plc Asda Stores Ltd J Sainsbury Plc Wm Morrison Supermarkets Plc Marks & Spencer Plc Boots UK Ltd Co-operative Group Ltd, The Waitrose Ltd Argos Plc B & Q Plc DSG International Plc Spar Ltd (UK) Arcadia Group Ltd Iceland Frozen Foods Ltd Next Plc Debenhams Retail Plc Lidl Ltd Primark Stores Ltd Musgrave Group Plc John Lewis Partnership Plc Others Total
Source:

2006 11.5 5.6 5.8 4.2 3.0 2.2 1.2 1.2 1.4 1.5 1.5 0.9 0.6 0.5 0.9 0.9 0.5 0.4 0.8 0.7 54.6 100.0

2007 11.7 6.0 5.8 4.2 2.8 2.3 1.4 1.3 1.5 1.5 1.6 0.9 0.6 0.6 0.9 0.8 0.6 0.5 0.7 0.8 53.4 100.0

2008 12.3 6.3 5.7 4.5 2.8 2.4 1.7 1.4 1.5 1.4 1.5 1.0 0.6 0.7 0.8 0.8 0.6 0.6 0.7 0.8 51.8 100.0

2009 12.6 6.7 5.9 4.9 2.9 2.5 1.8 1.5 1.5 1.4 1.4 1.1 0.9 0.8 0.9 0.8 0.7 0.7 0.8 0.8 49.6 100.0

2010 13.1 7.1 6.1 5.2 3.1 2.5 2.0 1.6 1.5 1.4 1.3 1.1 0.9 0.9 0.9 0.9 0.8 0.8 0.8 0.8 47.4 100.0

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 14

Store-Based Retailing Brand Shares: % Value 2007-2010

% retail value rsp excl sales tax Company Tesco Plc Asda Stores Ltd J Sainsbury Plc Wm Morrison Supermarkets Plc Marks & Spencer Plc Boots UK Ltd Co-operative Group Ltd, The Waitrose Ltd Argos Plc B & Q Plc DSG International Plc Spar Ltd (UK) Arcadia Group Ltd Iceland Frozen Foods Ltd Next Plc Debenhams Retail Plc Lidl Ltd Primark Stores Ltd Musgrave Group Plc John Lewis Partnership Plc Others Total
Source:

2007 11.7 6.0 5.8 4.2 2.8 2.3 1.4 1.3 1.5 1.5 1.6 0.9 0.6 0.6 0.9 0.8 0.6 0.5 0.7 0.8 53.4 100.0

2008 12.3 6.3 5.7 4.5 2.8 2.4 1.7 1.4 1.5 1.4 1.5 1.0 0.6 0.7 0.8 0.8 0.6 0.6 0.7 0.8 51.8 100.0

2009 12.6 6.7 5.9 4.9 2.9 2.5 1.8 1.5 1.5 1.4 1.4 1.1 0.9 0.8 0.9 0.8 0.7 0.7 0.8 0.8 49.6 100.0

2010 13.1 7.1 6.1 5.2 3.1 2.5 2.0 1.6 1.5 1.4 1.3 1.1 0.9 0.9 0.9 0.9 0.8 0.8 0.8 0.8 47.4 100.0

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

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Table 15

Non-Grocery Retailers Company Shares: % Value 2006-2010

% retail value rsp excl sales tax Company Boots UK Ltd Marks & Spencer Plc Argos Plc B & Q Plc DSG International Plc Arcadia Group Ltd Next Plc Debenhams Retail Plc Primark Stores Ltd John Lewis Partnership Plc Carphone Warehouse Ltd, The Wilkinson Hardware Stores Ltd TK Maxx Ltd Homebase Ltd Comet Group Plc Lloyds Pharmacy Ltd WH Smith Plc IKEA Ltd Matalan Ltd HMV Music Ltd Woolworths Group Plc Others Total
Source:

2006 4.3 5.1 2.6 2.9 3.0 1.2 1.7 1.6 0.8 1.3 0.7 0.9 0.7 1.2 1.2 1.1 1.0 0.9 0.8 0.7 1.3 65.1 100.0

2007 4.5 4.5 2.9 2.9 3.0 1.2 1.8 1.6 1.0 1.6 1.0 1.0 0.8 1.2 1.2 1.1 0.9 0.9 0.8 0.7 1.3 64.2 100.0

2008 4.7 4.4 2.9 2.9 3.0 1.2 1.6 1.6 1.2 1.6 1.2 1.1 1.1 1.1 1.2 1.1 0.9 0.9 0.8 0.7 0.6 64.2 100.0

2009 5.0 4.7 3.0 2.9 2.8 1.8 1.8 1.7 1.4 1.6 1.2 1.2 1.1 1.1 1.2 1.1 0.9 0.9 0.8 0.8 63.0 100.0

2010 5.2 4.9 3.2 2.9 2.7 1.9 1.8 1.8 1.6 1.6 1.3 1.2 1.2 1.1 1.1 1.0 1.0 0.9 0.9 0.8 61.9 100.0

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 16

Non-Grocery Retailers Brand Shares: % Value 2007-2010

% retail value rsp excl sales tax Brand Company Boots Marks & Spencer Argos B&Q Currys Next Debenhams Primark John Lewis Carphone Warehouse Wilkinson TK Maxx Homebase Comet Lloyds Pharmacy IKEA PC World Matalan HMV Superdrug Woolworths Boots UK Ltd Marks & Spencer Plc Argos Plc B & Q Plc DSG International Plc Next Plc Debenhams Retail Plc Primark Stores Ltd John Lewis Partnership Plc Carphone Warehouse Ltd, The Wilkinson Hardware Stores Ltd TK Maxx Ltd Homebase Ltd Comet Group Plc Lloyds Pharmacy Ltd IKEA Ltd DSG International Plc Matalan Ltd HMV Music Ltd Superdrug Stores Plc Woolworths Group Plc

2007 3.7 4.5 2.9 2.9 2.0 1.8 1.6 1.0 1.6 1.0 1.0 0.8 1.2 1.2 1.1 0.9 1.0 0.8 0.7 0.8 1.3

2008 4.3 4.4 2.9 2.8 2.0 1.6 1.6 1.2 1.6 1.2 1.1 1.1 1.1 1.2 1.1 0.9 1.0 0.8 0.7 0.8 0.6

2009 4.9 4.7 3.0 2.9 1.9 1.8 1.7 1.4 1.6 1.2 1.2 1.1 1.1 1.2 1.1 0.9 0.9 0.8 0.8 0.8 -

2010 5.1 4.9 3.2 2.9 1.9 1.8 1.8 1.6 1.6 1.2 1.2 1.2 1.1 1.1 1.0 0.9 0.9 0.9 0.8 0.8 -

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Others Total
Source:

66.2 100.0

66.1 100.0

65.1 100.0

64.1 100.0

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 17

Non-store Retailing Company Shares: % Value 2006-2010

% retail value rsp excl sales tax Company Tesco Plc Shop Direct Home Shopping Ltd Argos Plc Amazon.com Inc Next Plc Apple Inc J Sainsbury Plc Ocado Group PLC Play Ltd Asda Stores Ltd John Lewis Partnership Plc Marks & Spencer Plc DSG International Plc QVC UK Ltd Dell Corp Ltd Redcats AS Findel Plc Avon Cosmetics Ltd N Brown Group Plc Freemans Grattan Holdings (FGH) Freemans Plc Grattan Plc Others Total
Source:

2006 6.1 10.2 6.8 3.5 4.0 1.1 1.7 1.1 1.5 0.5 1.0 0.5 0.8 1.7 1.6 2.3 1.7 1.3 0.5 0.9 0.9 50.4 100.0

2007 6.9 7.8 6.2 4.1 3.6 1.3 2.1 1.2 1.5 0.8 1.2 1.1 1.1 1.6 1.5 2.1 1.8 1.1 0.7 0.7 0.7 50.8 100.0

2008 7.5 7.4 5.9 4.4 3.3 1.7 2.0 1.3 1.6 1.1 1.3 1.4 1.3 1.4 1.4 1.4 1.4 1.1 0.9 0.6 0.5 51.0 100.0

2009 7.6 7.1 5.5 4.6 3.3 2.0 2.1 1.5 1.7 1.3 1.4 1.4 1.5 1.4 1.3 1.2 1.2 1.0 1.0 0.9 50.9 100.0

2010 7.7 6.6 5.1 5.0 3.0 2.2 2.2 1.7 1.7 1.6 1.5 1.5 1.4 1.3 1.3 1.2 1.0 0.9 0.9 0.8 51.4 100.0

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 18

Non-store Retailing Brand Shares: % Value 2007-2010

% retail value rsp excl sales tax Brand Company Tesco online Littlewoods Argos Amazon Next Directory Apple Sainsbury's Ocado Play Asda John Lewis Marks & Spencer QVC Dell Redcats Findel - various Tesco Plc Shop Direct Home Shopping Ltd Argos Plc Amazon.com Inc Next Plc Apple Inc J Sainsbury Plc Ocado Group PLC Play Ltd Asda Stores Ltd John Lewis Partnership Plc Marks & Spencer Plc QVC UK Ltd Dell Corp Ltd Redcats AS Findel Plc

2007 6.9 7.8 6.2 4.1 3.6 1.3 2.1 1.2 1.5 0.8 1.2 1.1 1.6 1.5 2.1 1.8

2008 7.5 7.4 5.9 4.4 3.3 1.7 2.0 1.3 1.6 1.1 1.3 1.4 1.4 1.4 1.4 1.4

2009 7.6 7.0 5.5 4.6 3.3 2.0 2.1 1.5 1.7 1.3 1.4 1.4 1.4 1.3 1.2 1.2

2010 7.7 6.5 5.1 5.0 3.0 2.2 2.2 1.7 1.7 1.6 1.5 1.5 1.3 1.3 1.2 1.0

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Avon N Brown - various Arcadia Comet Others Total

Source:

Avon Cosmetics Ltd N Brown Group Plc Arcadia Group Ltd Comet Group Plc

1.1 0.7 0.9 0.6 51.9 100.0

1.1 0.9 0.8 0.8 51.8 100.0

1.0 1.0 0.8 0.8 51.9 100.0

0.9 0.9 0.8 0.7 52.3 100.0

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 19 million

Forecast Sales in Retailing by Category: Value 2010-2015

2010 Store-based Retailing Non-Store Retailing Retailing

Source:

2011 272,931.7 33,969.7 306,901.4

2012 274,065.7 37,620.5 311,686.2

2013 275,311.3 41,025.8 316,337.1

2014 276,858.5 43,946.8 320,805.3

2015 278,550.4 47,021.9 325,572.3

272,469.3 30,368.8 302,838.1

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 20

Forecast Sales in Retailing by Category: % Value Growth 2010-2015

% constant value growth 2010-15 CAGR Store-based Retailing Non-Store Retailing Retailing
Source:

2010/15 TOTAL 2.2 54.8 7.5

0.4 9.1 1.5

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 21 million

Forecast Sales in Store-Based Retailing by Category: Value 2010-2015

2010 Grocery Retailers Non-Grocery Retailers Store-based Retailing

Source:

2011 142,314.0 130,617.7 272,931.7

2012 143,836.8 130,228.9 274,065.7

2013 145,061.9 130,249.4 275,311.3

2014 146,325.9 130,532.7 276,858.5

2015 147,485.7 131,064.7 278,550.4

140,785.0 131,684.3 272,469.3

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 22

Forecast Sales in Store-Based Retailing by Category: % Value Growth 2010-2015

% constant value growth 2010-15 CAGR Grocery Retailers Non-Grocery Retailers Store-based Retailing
Source:

2010/15 TOTAL 4.8 -0.5 2.2

0.9 -0.1 0.4

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 23 million

Forecast Sales in Non-Grocery Retailing by Category: Value 2010-2015

2010

2011

2012

2013

2014

2015

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Clothing and Footwear Specialist Retailers Electronics and Appliance Specialist Retailers Health and Beauty Specialist Retailers Home and Garden Specialist Retailers Leisure and Personal Goods Specialist Retailers Mixed Retailers Other Non-Grocery Retailers Non-Grocery Retailers
Source:

29,348.3 12,854.0

29,138.8 13,010.3

28,997.8 13,220.6

28,986.4 13,474.7

29,094.4 13,774.6

29,299.8 14,193.2

13,348.9 21,082.9 24,917.2

13,436.0 20,155.4 24,690.9

13,437.9 19,652.3 24,478.8

13,413.1 19,344.2 24,264.2

13,331.8 19,243.0 24,053.8

13,206.9 19,296.4 23,853.9

24,695.4 5,437.7 131,684.3

24,746.2 5,440.1 130,617.7

25,027.2 5,414.3 130,228.9

25,407.1 5,359.6 130,249.4

25,747.0 5,288.2 130,532.7

26,013.9 5,200.6 131,064.7

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 24

Forecast Sales in Non-Grocery Retailing by Category: % Value Growth 2010-2015

% constant value growth 2010-15 CAGR Clothing and Footwear Specialist Retailers Electronics and Appliance Specialist Retailers Health and Beauty Specialist Retailers Home and Garden Specialist Retailers Leisure and Personal Goods Specialist Retailers Mixed Retailers Other Non-Grocery Retailers Non-Grocery Retailers
Source:

2010/15 TOTAL -0.2 10.4 -1.1 -8.5 -4.3 5.3 -4.4 -0.5

0.0 2.0 -0.2 -1.8 -0.9 1.0 -0.9 -0.1

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 25 million

Forecast Sales in Non-store Retailing by Category: Value 2010-2015

2010 Direct Selling Homeshopping Internet Retailing Vending Non-Store Retailing

Source:

2011 1,155.3 5,142.2 27,211.8 460.4 33,969.7

2012 1,166.5 5,060.8 30,934.9 458.3 37,620.5

2013 1,167.3 4,993.4 34,410.6 454.6 41,025.8

2014 1,158.8 4,882.9 37,460.3 444.8 43,946.8

2015 1,147.1 4,780.9 40,659.1 434.8 47,021.9

1,137.3 5,319.8 23,441.9 469.7 30,368.8

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 26

Forecast Sales in Non-store Retailing by Category: % Value Growth 2010-2015

% constant value growth 2010-15 CAGR Direct Selling Homeshopping Internet Retailing Vending Non-Store Retailing
Source:

2010/15 TOTAL 0.9 -10.1 73.4 -7.4 54.8

0.2 -2.1 11.6 -1.5 9.1

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

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APPENDIX
Operating Environment
Foreign direct investment in retail British law has a very relaxed approach to foreign direct investment, and most foreign companies are treated in a similar way to UK-based companies. In addition, the UK government offers generous tax allowances such as research and development tax credits in order to draw in overseas investment. The British government welcomes foreign direct investment, as it plays a huge role in stimulating the UK economy. In 2009, foreign direct investment in the UK stood at US$24.8 billion, according to the World Bank, which demonstrates its importance to the country.

Informal retailing Informal retailing is very significant in the UK, as there are a large number of markets selling a wide and diverse range of products. Markets struggle to compete with supermarkets and other high street shops; hence they often do not pay taxes as they struggle to succeed financially. The development of large shopping malls such as Westfield has made it even harder for markets to compete with high street chains. Low-priced retailers such as Primark also make it very difficult for markets to compete, especially ones which pride themselves on low prices, as consumers can get the same cheap offering, but in a more convenient indoor location, which is particularly appealing, considering the regular bad weather conditions the UK faces. Informal retailing is declining as a result of competition from cheap retailers, in addition to stricter government policies regarding the payment of tax by small businesses. As the new Conservative government has launched a crackdown on benefit thieves, it is also aiming to make it extremely difficult for small businesses to avoid payment of taxes or national insurance when they meet the threshold. Clothing, accessories and bags is a huge category within informal retailing, as many markets use the extra unwanted stock from high street names and cut out the labels before reselling them at a fraction of the recommended retail price. Also, a number of designers start their own brands in this way, as it is much cheaper than setting up a bricks-and-mortar store. Food markets are also growing in popularity in the UK, due to the strong reputation of famous markets such as Borough market, which offers premium and unusual products. Informal retailing can either attract consumers on a budget, or alternatively wealthier consumers who are looking for a more original products which cannot be found in high street stores. Some markets with a specific focus attract niche consumers. For instance, Londons Portobello market is renowned for antiques, so attracts collectors. There are lobby groups to support markets, such as the National Federation of Market Traders, which offers a weekly newsletter and help with insurance. A lobby group was also set up to oppose new high street chains on and around Portobello Road, and the Save Portobello Road campaign was born in response to the opening of an All Saints clothing store and the planned redevelopment of one of the largest antiques arcades in the area.

Opening hours There are no restrictions on opening hours in the UK from Monday to Saturday. However on Sundays, large retailers which are over 280 sq m are only allowed to open for six hours between 10am and 6pm. Large shops are also prohibited from opening on Easter Sunday. The Christmas Day Trading Act, which came into force in December 2004, also prohibited large stores from opening at Christmas. This law has been criticised, as millions of shoppers buy products over the internet at Christmas, so it has been argued that it is illogical that they cannot also shop in bricks-andmortar stores.

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A number of large supermarkets and small off licenses/convenience stores are open 24 hours a day, seven days a week, with the exception of Christmas and Sundays. Sunday trading hours came under attack in 2010, as Boxing Day, traditionally the first day of the sales, fell on a Sunday. The majority of retailers which open on Sundays are large high street chains in busy city centre locations. In rural areas the majority of shops are closed on Sundays and during official holidays such as the Easter weekend. Retailers strongly criticised Sunday Trading Hours, which they claimed would lead to a missed opportunity worth millions of pounds, but the government has not mentioned any plans to water down this law.

Retail landscape As city centres become increasingly saturated with high street chains, retailers are using out-of-town locations to continue to pursue store expansion plans in the UK. The growth of out-of-town shopping locations is being spurred by supermarkets, which often seek cheaper locations and large enough premises for their superstores. Shopping malls are also increasing in popularity, as the official end of the recession meant that more families were willing to spend money on a family day out. Shopping malls provide an ideal family experience, especially in the winter, as they often contain shops, cinemas, restaurants and even seasonal attractions such as ice rinks, for instance in Westfield Shepherds Bush during the Christmas period in December 2010. Out-of-town locations are often occupied by outlets offering mid-market or designer goods at permanently discounted prices. This makes them particularly appealing to bargain-hunters or lovers of designer labels seeking to invest in high-quality products and make a considerable saving at the same time. Full-priced luxury retailers need to be located in premium areas, usually in neighbourhoods with a large proportion of wealthy consumers, or upmarket tourist destinations such as Mayfair in London, where the Ritz is located. Location is of the utmost importance to luxury brands, as it plays a vital role in reinforcing the image of the brand. Shopping malls may be taking share from city centre locations, as consumers increasingly seek a day of entertainment when shopping, rather than a simple shopping trip. If shoppers need to buy something specific, or do not have a lot of time to spare, they are more likely to buy online. Alternatively, if they are looking for a more complete shopping experience, then a mall often presents a more pleasant environment than a city centre.

Cash and Carry

Cash and carry is becoming less important in the UK, as consumers can often find good deals within grocery retailing channels, especially with the constant price war between the four leading grocery retailers in the country. Cash and carry outlets are also in less convenient locations, and supermarket chains are usually on the doorstep of the majority of consumers throughout the UK, with the exception of some rural villages. Cash and carry has a strong focus on wholesalers, which account for the majority of its customers. In the improved economic climate, sales to wholesalers picked up, as independent retailers are not struggling as much as during the recession, although they still face the challenge of competing with supermarkets. In the annual results of Booker, one of the largest cash and carry retailers in the country, it achieved sales growth of 7%, and its profits increased by 15%, which indicates that independent trading is improving, even if only slightly. The company attributes its results largely to increasing its range, which indicates an increase in demand. Much of the business of cash and carry/warehouse club operators depends on well-established distribution networks, which are required to effectively service foodservice players and independent retailers. More retailers switched from collecting orders from a warehouse to deliveries during the review period. The benefits of delivered orders include access to an integrated range of services.
Cash and Carry: Sales by National Brand Owner: Sales Value 2007-2010

Table 27

million, current prices

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Company (NBO) Booker Brakes Group The Bestway Group Makro

Source: Note:

Brand(s) Booker Brakes Bestway, Batley Makro

2007 3,060,000 1,811,400 1,810,000 n/a

2008 3,100,000 2,047,600 1,890,000 1,040,000

2009 3,200,000 2,129,504 2,050,000 899,000

2010 3,400,000 n/a n/a n/a

Euromonitor International from trade associations, trade press, company research, trade interviews Sales value excludes VAT, sales tax

Table 28 Outlets Company (NBO)

Cash and Carry: Number of Outlets by National Brand Owner: 2009-2010

Booker The Bestway Group Makro Costco Brakes Group

Source:

Brand(s) Booker Bestway, Batley Makro Costco Brakes

2009 173 51 29 21 n/a

2010 73 n/a n/a 21 n/a

Euromonitor International from trade associations, trade press, company research, trade interviews

DEFINITIONS
This report analyses the market for retailing in the UK. For the purposes of the study, the market has been defined as follows: Store-based retailing Grocery retailers Hypermarkets Supermarkets Discounters Small grocery retailers Convenience stores Forecourt retailers: Chained forecourt retailers; Independent forecourt retailers Independent small grocers Food/drink/tobacco specialists Other grocery retailers Non-grocery retailers Mixed retailers Department stores Variety stores Mass merchandisers Warehouse clubs Health and beauty specialist retailers Chemists/pharmacies Parapharmacies/drugstores Beauty specialist retailers Other healthcare specialist retailers Clothing and footwear specialist retailers

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Home and garden specialist retailers Furniture and furnishings stores DIY, home improvement and garden centres Electronics and appliance specialist retailers Leisure and personal goods specialist retailers Booksellers and stationers Audio-visual stores Toys and games stores Sports goods stores Pet shops and superstores Other leisure and personal goods specialist retailers Other non-grocery retailers

Non-store retailing Vending Homeshopping Internet retailing Direct selling

Other terminology: GBO refers to Global Brand Owner, which is the ultimate owner of a brand. NBO refers to National Brand Owner, which is the company licensed to distribute a brand on behalf of a GBO. The NBO may be a subsidiary of a GBO or it may be a completely separate company. Share tables at both GBO and at NBO level are provided in the report. Reference to shares in the report analysis is at NBO level.

Sources used during research include the following:

Summary 1 Official Sources Research Sources Eurostat Office of National Statistics Trade Associations Association of Convenience Stores Ltd Association of Manufacturers of Domestic Appliances Automatic Vending Association Booksellers Association UK & Ireland British Association of Record Dealers British Clothing Industry Association British Footwear Association Direct Selling Association European Distance Selling Trade Association (EMOTA) European Vending Association Mail Order Traders' Association (MOTA) Toy Retailers Association Trade Press Drapers Financial Times Forecourt Trader

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Namnews Retail Bulletin Retail Week The Grocer

Source: Euromonitor International

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